Introduction to Investing Apps for Muslims

Background

We use investment apps to invest in the stock market. They trace their history back to Charles Schhwab, one of the first real “discount” brokers -- founded in 1971. Today, many of the early pioneers, such as Charles Schwab and Fidelity, remain major players in the industry, but there are also many newer entrants offering a wide range of services and products, in addition to just straight up buying and selling stocks.

Today, we're spoiled for choice -- with hundreds of apps catering to all sorts of different niches. In this post, we'll round up all the apps focusing on Muslims, and see how they stack up against each other.

General features you’d want in an investing app

Before diving into the Muslim-specific features, let's take stock of what we'd like to see in an investing app in general:

• Commission free: It better be commission free! If you're paying for each individual trade, then you're wasting your dollars.

• Supports international investors: Many investing apps are restricted to just citizens of the country they're based in. So, US apps for US investors, and so on. having an app that exposes the user to the U.S stock market can be a huge advantage for non-U.S. citizens and people who live in other countries.

What makes an investing app “good” for Muslims?

Now, to the important bit. Investing as a Muslim is fundamentally different than investing for anyone else.

Here are the things that matter to Muslims:

🌙 Halal Screening

Most folks don't give a toss what they invest in. Muslims, however, can only invest in companies that are Shariah compliant.

In order for a company to be compliant, a stock must pass the Shariah screening requirements.

But how do you know?

Just look it up with a screening app. Most of them follow the Accounting and Auditing Organization for Islamic Financial Institution (or "AAOIFI") standard when evaluating if a stock is compliant.

This involves checking for 3 things:

1. Revenue Screen: The company must not be involved in activities that are against Shariah (e.g. Interest, Gambling, Alcohol along with Pork Related products & Activities, Tobacco, Pornography … etc.). We verify this by validating that no more than 5% of the revenue a copmany earns comes from non-compliant activities

2. Interest Ratio: Interest Bearing Securities / Trailing 36-month average market capitalization <= 30%

3. Debt Ratio: Interest Bearing Debt / Trailing 36-month average market capitalization <= 30%

🔍 Monitoring Stock Compliance

We've seen how Shariah compliance depends on several factors, that can change over time. That means a stock can move into and out of compliance. Having the app track this for you, and notify you if an investment becomes non-compliant is absolutely crucial for your peace of mind.

🚥 Fund Screening

Individual stocks aren't the only things on the menu when you're investing.

In fact, most people invest most of their money in funds — like ETFs and Mutual Funds. Thing is, most of these are non-compliant because they could contain hundreds of stocks, and it just takes a single non-compliant stock to turn the whole thing non-compliant.

Here's where fund screening comes in. Checking the compliance for each stock in a fund would be incredibly tedious, so you'd want an investing app that offers a fund screener that checks the thing in one go.

🫧 Fund Purification

It's great to know if stocks inside a fund are compliant or not, but the problem is that there are only a handful of funds that are actually compliant (literally, just 5 funds!).

What would be more helpful is if you can actually trade the compliant part of the fund. That's what "Fund Purification" is: buying up just the compliant stocks inside a fund, while avoiding the non-compliant stocks.

Let's talk Halal Investing Apps!

We've covered all the features, now let's talk apps.

I must warn you though. Unfortuantely, for all the plethora investing apps out there, you'd think there'd be tens of investing apps for Muslims to choose from. Sadly, there aren't that many.

In fact, we couldn't find more than a couple. While there's no shortage of "screening apps" that tell you if a stock is compliant or not, there aren't any that allow you to invest.

1. Amal Invest: Your on our site, so you better believe we're on the list! Amal's an investing app built for Muslims. It allows you to invest in the U.S stock market from almost everywhere!

2. Zoya: The company offers a screening app, though they have announced plans to release an investing app some time in the future.

3. Islamicly: The company offers a screening app for now.

Let's compare these apps based on the criteria we discussed: